Papers feel pain, but hope for gain

Bleak midwinters don't come much bleaker than this in newspapers. Falling sales, falling ad revenues, rising redundancies: and January is proving yet another wickedly unnerving month.

Reasons to be cheerful - though they exist - have seldom been harder to find.

December's ABC circulation figures tell an essential part of the story: just two national titles out of 30 were able to post an increase on November. One was the Financial Times, which posted its gains overseas while the UK edition fell back again. Another was the Sunday Express, recovering from a particularly awful November, but still down 10 per cent year on year. Tiddler triumphs in a pond of despond.

In short, the surge of hope after 11 September has not lasted. Piers Morgan's fabled rediscovery of a higher Mirror journalism sees him 125,000 copies shy of August's Big Brother-infected total.

Only one Sunday paper is selling more than it did a year ago (and you're reading it now). Papers may be necessary when there's a big story, but such gains - with a few exceptions - disappear as easily as Osama bin Laden.

And as for ad revenues, the red ink continues to flow from a black hole of diminished expectations. Guardian Newspapers (which runs The Observer and Guardian) said its ad take was trailing £30 million behind forecasts when it joined the long list of publishers making redundancies last week.

The blight is common, spreading out to the regional press now: the moment of recovery is dismally unforecastable, dickering between the end of 2002 and some time in 2003.

Yet gloom, glorious gloom, is not quite the whole of the picture. One positive, right across the broadsheet market, is a successful escape from the Murdoch-generated price war that has raged for nearly nine years. The Guardian, Telegraph and Independent must have feared what moving to a more realistic cover price after such a long time would do to their circulations.

In fact, the damage has been minor going on infinitesimal. The Guardian and the Independent are both selling more than they did this time last year (the Guardian ahead by 10,000 copies a day). British broadsheets are still a bargain compared with their rivals across the Channel, but at least the balance between cover price revenue and money from ads is a healthier one - and nobody has gone broke making it so.

The overall statistics - national morning newspaper sales down to 12,901,799 from 13,088, 467 in December 2000 - don't look quite as grim when when you remember that.

Remember, as well, that Associated's Metro freesheet series is nudging towards the million distribution point. Any Fleet Street circulation manager will privately tell you what his paid-for title has lost to Metro in bookstall sales. Why not, then, count Metro in the overall readership figure? When you do that, the whole market looks a deal more resilient.

Redundancies, too, have an inevitable role in an industry so vulnerable to economic shifts. When ads vanish, pagination automatically contracts. If job losses can be organised to fit this logic without damaging the ability of the paper as a whole to respond to a news crisis, there are sometimes long-term benefits to be had as new talent gets its chance. Pain, to be sure, and a potential loss of morale; but there is also a chance for skilful managements to get things right.

Who is getting most things right at the moment? December's ABCs offer clues as well as devils in the detail. Associated's margins are suffering, but the Mail is still going strong and the Mail on Sunday, though sliding a bit, looks in great shape beside the wreck of the Sunday Express.

The Sunday Times is running vigorously on the spot. Piers Morgan may be losing out, but not as badly as David Yelland's Sun, down almost 4 per cent year on year. The Daily Star and Sunday Sport - in their simple, nipple-strewn way - seem to have found stability.

All the usual suspects cluster on the blight side. The People, down almost 9 per cent in a year; the Expresses, where no Desmond magic works; the Independent on Sunday, which manages to sell a scant 139,000 at full price in the UK. (More redundancies there, as there were last week, threaten rampant anorexia).

But the fundamental questions that apply to the weaker contenders are, in a sense, recession-irrelevant. The strugglers would be struggling in boom times, too.

The more interesting calculation is which of the real battlers is going to have the nerve and resource to make a move.

Watch News International first. Rupert Murdoch delivered a notably upbeat assessment of US advertising recovery a few days ago. He'll want to find ways of pushing the News of the World back over 4 million (because that will push Trinity Mirror deeper into the mire). He'll be anxious to reinvigorate the Sun. He has, fascinatingly, kept the Times at 40p - even 30p in Scotland - while a cash-strapped Telegraph strives ever more desperately to hang onto its million sales.

Those who think that Murdoch has lost interest in newspapers may have another think coming. He began the price war in the teeth of John Major's recession. This volcano isn't extinct. It's smoking.

And if it erupts, spewing money again, we shall know that the great god Competition has begun to decree that the bad times are over.